Additional Property Protection

The following is not an exhaustive list but sets out additional areas requiring consideration to provide more comprehensive cover to protect the investment. In particular certain items of plant and equipment require statutory inspections that can be provided under an engineering insurance.  

Directors and Officers Insurance (D&O Insurance)

Why do Residents' Associations need Directors and Officers (D&O) insurance cover? 

Directors and Officers of Residents' Associations often hold their positions as volunteers, out of goodwill, or as a part of their service as a managing agent. Many people do not realise that when taking on this role they can become personally liable for the financial consequences of their actions and errors.  This is where Directors and Officers Insurance (D&O) can help.
The law does not distinguish between actions on behalf of a residential management company and those of a Director of a FTSE 100 company. Directors and Officers can be held personally liable for the financial consequences of their actions and errors and face potentially unlimited personal liability.
Even the most careful Directors can make decisions in good faith which in hindsight prove to be ill-judged. Ignorance is of course no defence in the eyes of the law.

What is covered by Directors and Officers Insurance?

Directors and Officers Insurance cover is provided for breach of duty, trust, contract, neglect, misleading statements and wrongful trading, acts or omissions. Costs that can be incurred include:

  • Legal Defence Costs
  • Damages awarded against a director
  • Out of court settlements
  • Claimant’s costs and expenses
  • Legal advice
  • Legal representation

Who is covered by Directors and Officers Insurance

Any Director, Officer, Employee, Shadow Director or Trustee presently or previously appointed by the association is covered for their actions whilst working on behalf of the organisation. This is deemed to include legal heirs or representatives.

Does the residents' management company need to have other covers with Pi-Property insurance?

No, cover is available on a stand alone basis.

 

What can go wrong? Claims examples and case studies

In today’s highly litigious society, there is no shortage of potential claimants causing headaches for Directors..... and you never know quite who you might upset within a block, anyone from a barrister or accountant to a squirrel! As can be seen below...

  • Two Directors of a resident management company were sued for libel by a former Director. Following failure of disclosure of conflicts of interest a Director was removed from the board. Despite the former Director dropping his libel case after a mediation hearing, over £35,000 of legal costs were incurred under the D&O policy.
  • A squirrel entered the roof space of a block of flats and damaged the wiring. It gained access from nearby trees. An action was brought against the Directors alleging that they had not maintained the trees properly as if they had the squirrel would not have been there in the first place! Whilst the Directors successfully defended the case – legal costs were paid under the D&O policy of over £4,000.
  • A resident sued the Directors for devaluation of their flat following failure of the Directors to identify and rectify external dilapidation. Legal costs in this instance exceeded £13,000.
  • A resident in an apartment block campaigned for the removal of the board and election of a new board. The chairman of the board wrote to his fellow residents to point out errors in allegations made against him. It happened that the resident making the allegations was a barrister who viewed the response as libellous! Although the barrister never followed up her allegations at the court hearing, the D&O policy funded not only the legal advice, but the legal representation costs as well, amounting to over £20,000.
  • Directors of a resident management company were fined by Companies House after failing to file the annual company accounts on time. The D&O policy funded their legal costs in defending the action.
  • A resident sued the Directors and chairman of a management company when selling their flat for the diminution in the value of the property. It was alleged the management failed their duty of care in managing an unruly tenant in an adjacent flat. Legal costs exceeded £10,000.
  • The Secretary of a small block of flats was asked to obtain alternative Building Insurance quotations. The contract selected (in line with the majority of policies) contained a 'small print' restriction in respect of unoccupied/unfurnished flats. A pipe subsequently burst in an unoccupied flat causing considerable damage to the property below. The Secretary was held personally responsible for failing to obtain the best available cover.
  • Members of a management committee were held individually liable for failure to appoint a responsible builder to re-roof a block of flats. The work was not of a reasonable standard and the company who completed the job later went into administration. The costs associated with re-roofing the property were held accountable against the Directors for failing to appoint competent contractors.

Directors and Officers Insurance (D&O) FAQ's

As a managing agent I have professional indemnity insurance, does that not protect me?

In short, no, professional indemnity and Directors and officers insurance protect you in respect of legal liabilities arising in different circumstances. 

Your professional indemnity insurance protects you in respect of errors and omissions arising in your professional capacity as a managing agent. If you maintain a position as both managing agent and as a Director of a residential management company, your professional indemnity insurance will not protect you in respect of actions carried out on behalf of the residents association.  

In addition the actions of other board members of the Residents' Association would not be picked up under your professional indemnity insurance. This is where Directors and Officers Insurance (D&O) can help.

 

Why Pi Directors and Officers Insurance (D&O)?

The simple answer is that if people really understood the financial consequences of running a management association, they would never agree to do so without the benefit of Directors and Officers Insurance protection.

Specifically designed for Property Managers, Pi Directors and Officers Insurance provide you with the best support and advice so that you can inform your clients and protect their best interests.

Residents association Directors and Officers cover is an indispensable element in protecting management companies in today’s modern legal environment.

 

What is the solution?

In partnership with RSA we have devised a comprehensive and very affordable solution to protect this vital area of cover. Let us introduce Pi D&O insurance to you.

 

What sets Pi Directors and Officers Insurance (D&O) apart?

Our innovative and imaginative approach in meeting your insurance requirements gives you these features:

  • Our product is the only specific Residents Association policy to include Corporate Liability as standard
  • There is no excess in respect of any claims
  • Our product is also unique in the marketplace in that it has been designed to generate an income stream for property
  • Managers too

 

How does it work?

  • Premium tables enable you to indicate premiums to your clients directly
  • We can place you on cover immediately as soon as our written quotation is accepted
  • You will receive Policy documentation electronically within two working days

Engineering Insurance

This critical cover is often an area that is overlooked by property owners and managers.  Whilst inspection cover is often in place for a lift or two, many owners and managers are not fully aware of the range of services that can be provided by our engineering insurance partners.
At Pi-Property Insurance we partner with some of the world’s leading insurance names to provide a range of services as part of a risk management programme for you and your clients.

  1. Engineering Inspection – Typically lifts and boilers that require routine inspection, but do not forget items such as escalators, window-cleaning cradles, electrical and mechanical plant to name just a few.
  2. Inspection is just one area of the cover. Sudden and unforeseen damage can be included, as can consequential loss and even breakdown cover. Making the cover bespoke and really understanding what would benefit you / your client is what we try and do.
  3. Electrical Inspections – Fixed wire inspections can be undertaken by insurers to meet current regulations.
  4. Asbestos Surveys – Identify, assess and manage. Our providers will help you with the critical process of ensuring suitable surveys are carried out.
  5. Health and Safety Audits – Objective reports looking into the risks generated by the properties you own or manage.

Some of these are statutory requirements whereas others are “just” good business practice but all of the services provided can provide real benefit to you or your clients.

These are just a few of the areas that our partners can provide assistance for you. You may already utilise someone to provide these services but why not consider an alternative with a service provided by an established global insurer in conjunction with the advice and guidance from an award winning independent chartered insurance broker.

Loss Recovery Insurance

Why do you need Loss Recovery Insurance? 

When you are running a business, in the event that you need to make insurance claims following a loss, you need to have the confidence it is going to be sorted quickly.

Loss Recovery Insurance – For businesses this is an insurance policy which provides the policyholder with unlimited advice from an expert loss adjuster, to help you prepare, negotiate and settle your material damage or business interruption claim.

Acting independently of the insurance company, to help you achieve the fairest and fastest settlement possible under your insurance cover.

Key Features

If your insurance claim is more than £5,000  – within the terms and conditions of that policy – then Loss Recovery Insurance is for you. It provides you with unlimited advice from an expert loss adjuster, who will stand shoulder to shoulder with you, no matter how complicated or large the claim.

Most importantly, Loss Recovery Insurance gives you an expert in your corner who will deal directly with your insurer on your behalf, removing the hassle of you having to prepare and negotiate your claim.

They can also give you practical advice about things you can do to reduce the impact of a loss or to organise quotes to start remedial work or replace damaged goods.

Domestic Assistance Insurance

Why do Landlords & Residential Property Managers need Domestic Assistance cover? 

Landlords and Residential Property Managers will know that a sudden domestic emergency at one of your properties can be an unpleasant surprise and emergencies can be costly and inconvenient to put right. It’s not always easy to get a reputable contractor to come out at short notice to resolve the problem.

If an emergency makes your property unsafe, insecure, causes or is likely to cause damage to the property or its contents, we can provide you with a cost effective and efficient solution (for matters that are covered by the policy).

Domestic Assistance Insurance can help with the following emergencies:

  • The complete breakdown of the heating system
  • Plumbing and drainage problems
  • Damage which affects security, including locks and windows
  • If the only toilet is broken
  • Loss of the power supply
  • Lost keys
  • Vermin infestation

Additional Benefits

  • We will reimburse alternative overnight accommodation costs that you have agreed with us if the property is unsafe or uncomfortable to stay in.
  • There are no cover restrictions on age of boiler 
  • Cover is provided up to a limit of £1,000 for each event.

What can go wrong? Claims examples and case studies

Boiler breakdown

During a particularly cold snap last winter, on a Saturday morning, our insured’s boiler broke down. As our insured's property was occupied by a family with three young children, they were keen to resolve the problem for their tenant as soon as possible. The insured contacted us and we immediately appointed a contractor. The contractor attended the same day and ordered the replacement part needed to complete the repair to the boiler. The part was fitted the next day and the tenant was able to heat their home again.

Burst pipe

Our insured called when a burst pipe in the bathroom of one of their managed properties was causing water to drip through the kitchen ceiling resulting in damage and inconvenience. We arranged for a contractor to carry out an emergency repair on the pipe and stop the leak, minimising any further damage.

Security

When a burglary left our insured's house with a smashed front door window, their tenants were unable to leave the house to go to work. The insured contacted us and we immediately arranged for a contractor to make the property secure by boarding up the door. A further claim was made on the insured’s property insurance for a full replacement door.

Domestic Assistance FAQ's

What are the policy limits and excesses?

Limit of Indemnity per claim: £1,000
Contractor's Call-Out Charge: Not limited to a single call-out
Labour Costs:  
Parts and Materials:  
Alternate Accommodation Costs  Including transportation there

     

 

 

 

 

 

Is there any other optional cover available?

Uninsured events can be arranged on a pay per claim basis.

What if my claim is covered by another policy?

The policy will not cover any claims covered by another policy or any claim that could have been covered by any other policy if this policy did not exist.

What is the most common reason for a claim to be declined?

The most common reason for a prospective claim being declined is that it is not an 'emergency' as detailed in the policy. For cover to apply the circumstances must qualify as an "emergency". There must be a sudden unexpected event. Routine maintenance and minor faults are not covered, for example a dripping tap or faulty radiator.

Are there any conditions I should be aware of?

Full conditions, significant exclusions or limitations are summarised in the key facts table available on request.

Terrorism Insurance

Terrorism Insurance is not normally included as standard under any Property Owners Insurance policy so the advice given to you or your clients is critical to ensure the most suitable cover is purchased.

Currently, the world lives in a heightened state of alert following events of many different natures including in the UK and whilst it is often thought the major cities are at greatest risk, we should not be complacent that these are the only areas in which properties should be covered.

Our guidance to all property owners is to ensure you have Terrorism Cover in place, banks & pension funds will often insist upon it. As a property professional you should always recommend inclusion of cover for your client’s property including residential properties & blocks of flats. Failure to recommend this could certainly put you in jeopardy of litigation. 

Premiums outside of Greater London remain relatively low, but cost is not the sole consideration. In recent years there has been a more competitive element to providing this cover, with Pool Re no longer the sole insurer of such risks. 

Our recommendation:

  1. Ensure cover is always in place for you or your clients properties
  2. Understand what cover is available and at what price ( not all Terrorism cover is identical)
  3. If cover is refused, ensure that this is documented

Legal Expenses

Why do Landlords and Residential Property Managers need Legal Expenses Insurance? 

Being a landlord or property manager can provide a very good return on investment but the responsibilities you have are not without problems. In an ideal world your clients would have a problem-free relationship with their tenants but in reality issues such as, a dispute about the renewal of a lease, damage and dilapidation to the property and late or non-payment of rent can all prove an expensive headache.

What we cover

We will appoint a solicitor to represent you and pay their costs to protect your rights as a landlord or residential property manager arising from:

  • Repossession
  • Property damage, nuisance and trespass
  • Recovery of rent arrears
  • Alternative accommodation and/or storage costs while trying to gain repossession of your property
  • Property related prosecution defence

What can go wrong? Claims examples and case studies

Repossession

Our insured contacted us for legal advice after their residential tenant fell into arrears and continued to ignore reminders for payment. We directed our insured to our Online Legal Services website to download the necessary legal notice requiring the tenant to quit the property. Unfortunately the tenant ignored the legal notice and the matter escalated. We instructed solicitors to obtain a court order for repossession and paid solicitor’s costs and the court fee.

Recovery of rent arrears

Our insured contacted us after their tenant failed to pay rent for three months and then vacated the property. Despite our insured chasing their tenant for payment they were unable to get any response. We approved the claim and passed the matter to a panel solicitor. They were able to negotiate a payment plan with the tenant who was having cash flow issues. The insured received repayment, plus interest, over the following six months. ARAG settled the solicitor’s cost.

Rent indemnity

As the insured had taken out the additional rent indemnity cover and complied with the policy terms, we agreed to pay the rent arrears that had accrued while repossession was being sought together with legal costs and 75% of the rent for a further two months following repossession – a sum of just over £3,800.

Legal Expenses FAQ's

What are the policy limits and excesses?

Limit of Indemnity: £50,000
Accommodation Costs: £175 per day up to a maximum of £5,250 (equivalent to £30 days' worth)
Storage Costs: £50 per complete week for up to £300
Excess: 30 days for Rent Indemnity
Waiting Period: The first 90 days of any existing tenancy agreement

     

 

 

 

 

 

What are the top 3 reasons for claims?

  • Repossession of property
  • Pursuing compensation for dilapidations
  • Recovery of rent arrears

How does the rent indemnity part of the policy work with repossession?

Repossession proceedings often dovetail with rent arrears cases. Where repossession is sought because rent is owed or the term of the tenancy has expired and the landlord wishes to repossess the property, the rent indemnity pays the landlord's lost rent while the tenant continues to occupy the property, subject to an excess, which is normally covered by the deposit. The policy also covers up to 75% of rent that would have been payable for an extra couple of months after vacant possession. This gives the landlord time to clean and repair the property and to advertise for a new tenant to re-let.

Are there any conditions I should be aware of?

Cover under the policy is underpinned by the insured having a greater than 50% chance of successfully pursuing or defending a claim, enforcing a judgement or succeeding at an appeal. This is called the reasonable prospects of success.

The landlord must also act in a professional manner i.e. referencing & credit checking their tenants, taking a detailed inventory, keeping rental records up to date and protecting their tenants deposit etc.

Who can take up this cover?

It is important to check type of tenancy agreement used. Cover will not apply unless an Assured Shorthold Tenancy or other tenancy agreement described in the policy applies. Other conditions, exclusions and limitations are outlined in the key facts summary available on request.

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